Daily Market Outlook, December 14, 2022

  • Stocks Reverse CPI Surge

  • Wall Street surged higher on softer-than-expected CPI as investor risk sentiment seemed fuelled by the prospect of peak inflation being in the rear view mirror, however, as markets digested the data sentiment shifted significantly from the prospect of peak inflation to growth concerns, the intraday reversal was also deemed to be driven by profit-taking ahead of today's FOMC meeting and tomorrow's BoE & ECB meeting the final meaningful macro events of 2022. Asian equity markets have held onto small gains overnight as investors wait for Fed Chair Powell's press conference this evening.

  • The remaining central bank meetings this week are all likely to raise rates, however, markets are positioned for a reduction in the increment of rate rises, with markets currently pricing a 50bps move by the FOMC this evening. The focus for investors is going to be firmly centred on the Fed Chair Jay Powell's press conference, his comments will be parsed for any signs of a dovish tilt to his messaging, specifically his views on the Fed funds terminal rate, markets appear to be aligning around a 2023 terminal rate between 5.25% and 4.50%, markets will likely cheer any lean towards the lower end of the spectrum, however, markets are currently pricing a 4.82% terminal rate down from 4.98% ahead of the CPI release, if Powell pushes back against this reduction in expectations, expect further selling in equities as investors will likely seek solace in the safety of government debt over riskier assets.

  • Markets-wise, huge options expiration in US markets on Friday are likely to contain any major moves on Wall Street, with $3.9 trillion of options expiring on Friday, the options market is priced for a 4000-4100 range on the benchmark SP500, ahead of the options expiration the action is likely to remain broadly within this range, post-expiration offers the potential for a range expansion, with investors still pinning their hopes on a Santa rally into year-end!

Overnight Headlines


  • China’s Economy Likely Worsened Before Abrupt Covid Policy Shift

  • China Gives Up Counting All Covid Cases After Ending Mass Tests

  • China’s Zero-Covid Retreat Sparks Wealth Mgmt Product Sell-Off

  • Morgan Stanley Lifts China GDP Forecast On Reopening, Easing

  • Japan’s Tankan Highlights Manufacturing, Service Firms’ Divide

  • New Zealand Forecasts 2023 Recession As Rates Rise

  • Congressional Negotiators Reach Framework For Deal On Funding Gov

  • Fed Seen Slowing Rate Hikes, Likely Ending Them Below 5%

  • Dollar Weak After Soft US Inflation Data, Focus Switches To Fed

  • Crypto’s Binance Seeks to Reassure Over Reserves, Says Debt Free

  • Oil Slips As US Crude Stock Build Stirs Doubts On Demand

  • EU Pushes Gas Cap Decision To Next Week As Haggling Continues

  • EU Agrees To Tap Carbon Market For €20 Billion In Energy Pivot

  • Asia Stocks, US Futures Edge Higher Before Fed

  • Bipartisan Senate Bill Would Bar Huawei From US Finance System

  • Pfizer Awarded $1.96B Contract From US Gov For Paxlovid

FX Options Expiring 10am New York Cut

  • EUR/USD: 1.0375-80 (1.74BLN), 1.0450 (564M), 1.0500 (526M)

  • 1.0545-55 (505M), 1.0650 (444M), 1.0700 (929M), 1.0800 (406M)

  • USD/JPY: 136.00 (355M). USD/CHF: 0.9415 (210M)

  • GBP/USD: 1.2120 (210M). EUR/GBP: 0.8700 (239M)

  • AUD/USD: 0.6450 (960M), 0.6675 (216M), 0.6750 (327M)

  • NZD/USD: 0.6400 (1.02BLN), 0.6425 (1.15BLN)

  • USD/CAD: 1.3560 (1.1BLN)

Technical & Trade Views

SP500 Bias: Bullish Above Bearish Below 3900

4120 Target Achieved, New Pattern Emerging

  • Primary support is 3980

  • Primary upside objective is 4150

  • Failure at 3950 opens a test of 3900

  • 20 Day VWAP bullish, 5 Day VWAP bullish

EURUSD Bias: Bullish Above Bearish below 1.05

1.0620 Target Achieved, New Pattern Emerging

  • Primary support is 1.0590

  • Primary upside objective is 1.07

  • Failure at 1.05 opens a test of 1.04

  • 20 Day VWAP bullish, 5 Day VWAP bullish

GBPUSD Bias: Bullish Above Bearish below 1.22

  • Primary support is 1.22

  • Primary upside objective 1.24

  • Failure at 1.2080 opens a test of 1.2030

  • 20 Day VWAP bullish, 5 Day VWAP bullish

USDJPY Bias: Bullish above Bearish Below 137.70

  • Primary resistance is 137.70

  • Primary downside objective is 132

  • Acceptance above 138 opens a test of 139.30

  • 20 Day VWAP bearish, 5 Day VWAP bullish

AUDUSD Bias: Bullish Above Bearish below .6790

  • Primary support is .6790

  • Primary upside objective is .6900

  • Failure at .6700 opens a test of .6600

  • 20 Day VWAP bullish, 5 Day VWAP bearish

BTCUSD Bias: Intraday Bullish Above Bearish below 17500

18000 Target Achieved, New Pattern Emerging

  • Intraday 17500 is primary support

  • Primary upside objective is 18200

  • Failure at 17400 opens a test of 17200

  • 20 Day VWAP bearish, 5 Day VWAP bullish